Fund Technology, Docupace Technologies

Fund Technology | 2/1/2017 | Emily Sakamoto

The investor community is spearheading a new push towards transparency in the fund management space, following a period of increased regulation in this segment of the market.

The rise of digital applications and increased internet capabilities gives curious investors the infrastructure necessary to double check their providers. “Now a lot of investors are looking for raw data on their account and investments to take into their own systems and analyze appropriately,” said Adam Pinkert, director of private equity solutions at Backstop; Backstop is a CRM software provider to the alternative investment industry.

“We aim to provide our clients with transparency into everything we do so that they don’t have to wonder what’s going on,” said Bob Schwartz, CTO at SS&C Technologies.

SS&C is one technology vendor looking to give insight for clients into back-office activity, a method which holds companies accountable. Trends across the sector have seen the rise of increased transparency for clients, with the SEC’s best execution ruling for broker dealers the latest formal regulation catering to their protection.

Many industry pros believe this push from clients comes from the prevalence of digital, and the trend of immediacy, such as real-time capabilities, in the sector. Today’s internet has created an age of instant gratification, and that mindset has bled into the financial services industry.

“The end consumer today is really digitized in many aspects of their lives,” said Kevin Laraia, COO at Docupace, an electronic processing solution provider for financial services. “The financial services are just catching up. I think transparency is key.”

A more hand-on approach by clients simulates an environment of intense watch and care, as firms are continually put under pressure for regulators not only to show results but also step by step explanations of trade transactions to ensure measures such as best practice and execution are fulfilled. Clients, as the beneficiaries of these regulations, are made aware of their existence by their deeper integration into the companies, and are now demanding access to those records as well.

This level of involvement means technology providers for firms must come up with ways not only to deal execution and trade information to regulators and the firm, but for client access as well, opening questions of IT infrastructure capable of serving both institutional and retail investors simultaneously.

The future of transparency in fund management firms will not only depend on incoming regulation and compliance initiatives within the sector, but also the degree of client involvement moving forward. Helicopter clients are creating a need for technology that supports reporting for both fund management and client records. The cyclical nature of demands oscillates between clients and regulators, begging the question of what each party will view as the end game for transparency levels.

“Investors are becoming more demanding in part because regulators are becoming more demanding,” said Brian Sentance, CEO of Xenomorph, an enterprise data management system for financial markets. “It would be a silly person who would say they’re providing it to the regulators, I believe them, but they can’t provide it to me. Of course, if they can provide it to regulators, they can also provide it to investors.”

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About Docupace
Docupace Technologies, LLC pioneered and implemented SEC/FINRA-compliant Straight-through Processing technology for financial services companies. Docupace’s cybersecurity and document management and workflow solutions simplify the process of capturing, organizing, routing and accessing information for broker-dealers and registered investment advisors (RIAs) that, under new government regulations, must keep thorough, secure records of documents that explain how they formulated recommendations that are in the best interests of investors. Docupace’s innovative products have been proven to significantly reduce not-in-good-order (NIGO) conditions on document processing submissions for financial services companies.

Docupace currently services over 1 billion stored documents from more than 500 Broker Dealers and RIAs. For more information, please follow @docupace.

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